Interest Rate Update

The following are excerpts from the weekly newsletter published by HSH Associates for the week ending May 30, 2008:

“Mortgage rates flared higher this week, adding a little additional stress to the nation’s already-struggling housing markets. Conforming 30-year fixed rates rose by 15 basis points, while jumbo 30-year FRMs jumped by some 19 basis points. The tug-of-war for influencing interest rates between recession and inflation concerns was won this week by inflation concerns. Still, the modestly stronger growth story from two months ago isn’t a reliable indicator of where we presently are, or especially where we’ll go from here. Economic prospects remain dice.  Inflation may have won the day this week, but the collective tenor of the reports from next week will probably be a weak one, sufficient to cap this week’s rise and keep rates pretty steady.”

NATIONAL AVERAGES

TODAY

-

LAST WEEK

30 yr fixed mtg		6.02%		5.81%
15 yr fixed mtg		5.60%		5.39%
5/1 ARM		5.45%		5.26%
30 yr fixed jumbo mtg		7.21%		7.05%
5/1 jumbo ARM		6.23%		6.10%

Interest rates as of 5/30/08 per www.bankrate.com

Great Financing News!!!

On May 6, 2008, Fannie Mae made an announcement to improve the new Jumbo Agency program pricing to be closer to Conforming Agency pricing throught the end of the year. As a result, the rate difference between Conforming Loans ( Loans under $417,000) and “Jumbo Conforming” loans ( Loans between $417,000 and $729,750) shrank from about 0.50% to 0.125%.

This means that “Conforming Jumbo” Loans are at an interest rate of approx.  5.875% at .50 point Cost ( As of 5/7/08)!   Apr 5.937%. Keep in mind that these new increased “Jumbo Conforming” loans are due to expire at the end of this year, so now is a great time to consider buying a home, especially a condominium in the South Bay and the Palos Verdes Peninsula. When the conforming loan limits drop back to $417,000 at the end of this year, loans in excess of this amount will be at a much higher interest rate ( Jumbo loans cureently are at an interest rate of approx. 7.1%).